Managing Family Conflict

As Accountants and Business Advisors we have the opportunity to work with and consult to a wide range of diverse family business.  One of the most challenging aspects of being a family business consultant is when conflict exists between members in the family group.

Conflict can arise in many types of relationships including between spouses, parent and sibling or between siblings to name a few.  The potential for conflict expands as the number of relationships within the family group expands.   Consider that a family of four has six different relationships whereas a family of six has 15 different relationships.  When you factor in that some of these relationships span more than two generations, it is understandable that things can at times become somewhat confrontational.  In-laws or family members that are not direct blood line add another dimension again.

In the context of a family business the range of issues that may give rise to a potential conflict expand due to the fact that family members are often employed within the family business.  As a result we not only have the potential for conflict related to purely family matters but the added complication where there may be conflict in relation to the work environment also.  This situation is obviously unique to family business and as such it poses even greater challenges for not only the family involved but also for us as advisors.

So What Should You Do if Conflict Exists in Your Family Business?

In our experience there are a number of things that you should remember:

• Conflict is normal
• Differences in opinion are often healthy and can promote good results for the business
• Conflict can be good provided that it is managed correctly – unmanaged conflict is often destructive
• Do not let matters fester – deal with conflict quickly and in a fair manner
• Ruling with an iron fist will often give rise to the worst outcome
• Prevention is almost always better than cure

In our experience conflict can be prevented, managed or resolved in the family business through a number of processes including:

• Clearly defined policies for family members that relate to job roles, remuneration and qualifications etc.
• Structured and formal family meetings
• Strong and effective governance structures including clearly defined leadership
• A conflict resolution system
• Ensuring that communication channels are open

At Altitude Advisory we have had extensive experience in dealing with these issues.  If you are concerned about conflict in your family business or if you wish to prevent potential issues from arising in the future, we can assist you with:

• Facilitation of family meetings
• Establishment of family charters or constitutions
• Establishment of governance structures and reporting frameworks for both the family and the family business
• Access to qualified behavioural therapists to assist in the resolution of existing conflicts

Please contact Altitude Advisory for more information.